Correlation Between Wyndham Hotels and Humana
Can any of the company-specific risk be diversified away by investing in both Wyndham Hotels and Humana at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wyndham Hotels and Humana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wyndham Hotels Resorts and Humana Inc, you can compare the effects of market volatilities on Wyndham Hotels and Humana and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wyndham Hotels with a short position of Humana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wyndham Hotels and Humana.
Diversification Opportunities for Wyndham Hotels and Humana
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wyndham and Humana is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Wyndham Hotels Resorts and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc and Wyndham Hotels is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wyndham Hotels Resorts are associated (or correlated) with Humana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana Inc has no effect on the direction of Wyndham Hotels i.e., Wyndham Hotels and Humana go up and down completely randomly.
Pair Corralation between Wyndham Hotels and Humana
Assuming the 90 days trading horizon Wyndham Hotels is expected to generate 1.7 times less return on investment than Humana. But when comparing it to its historical volatility, Wyndham Hotels Resorts is 2.12 times less risky than Humana. It trades about 0.3 of its potential returns per unit of risk. Humana Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 25,466 in Humana Inc on September 4, 2024 and sell it today you would earn a total of 3,995 from holding Humana Inc or generate 15.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wyndham Hotels Resorts vs. Humana Inc
Performance |
| Timeline |
| Wyndham Hotels Resorts |
| Humana Inc |
Wyndham Hotels and Humana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wyndham Hotels and Humana
The main advantage of trading using opposite Wyndham Hotels and Humana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wyndham Hotels position performs unexpectedly, Humana can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Humana will offset losses from the drop in Humana's long position.| Wyndham Hotels vs. Samsung Electronics Co | Wyndham Hotels vs. Samsung Electronics Co | Wyndham Hotels vs. Hyundai Motor | Wyndham Hotels vs. Toyota Motor Corp |
| Humana vs. Cornish Metals | Humana vs. AfriTin Mining | Humana vs. Wheaton Precious Metals | Humana vs. Panther Metals PLC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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